Today there are a ton of apps available on your mobile phone. Some apps can be very helpful, while other apps are not so great. Now there are a number of apps available for investing. Just like anything related to your finances - be careful if you decide to try an investment app. Here are some Pros and Cons to consider.
Instant Information: Staying abreast of market and economic news is easy. You have instant access to lots of up-to-the-minute news and information.
Low Barrier of Entry: With some investment apps all you need is $5.00 to get started. With such a low barrier of entry anybody can invest.
Learn About Investing: Investment apps can be used to learn about investing. Some people feel since you can try investing with minimal loses mistakes can be less expensive while you learn.
Simple to Invest: You won’t feel overwhelmed with choices and decisions before investing. Plus investment apps are designed to be easy to use. This means it’s very simple and fast to invest.
Inexpensive: Commissions for investment app accounts are low. But watch out because once you cross a certain threshold you will likely see increased costs.
No Big Picture Perspective: Before investing, it’s wise to look at your big picture and evaluate a number of factors. Investment apps don’t consider your debt, tax situation, other investments, etc. Plus your overall Retirement Plan isn’t a factor when making decisions.
Easy to Use a Credit Card: Investing with a credit card is a very bad idea, but it’s easy with some apps. The odds are slim that you can successfully time a short trade perfectly and then pay the credit card bill on time with your profit.
Taxable Accounts: Most investing apps only provide taxable accounts. This means you can’t utilize tax-advantage accounts like an IRA for example.
False Sense of Confidence: Many investment apps began offering services during historic bull market conditions. So unfortunately app users might experience a false sense of confidence and be unprepared for market fluctuations.
Questionable Risk Tolerance: Investment apps attempt to determine an investors’ risk tolerance with a questionnaire and an algorithm. Some feel this can lead to a risk tolerance that is inaccurate leading to bad investment choices.
This content was produced to provide information on a topic that may be of interest and developed from sources believed to provide accurate information. This information is not intended as tax or legal advice.
Mutual funds and exchange-traded funds are sold only by prospectus. Please consider the charges, risks, expenses and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.
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